The town is best known as the birthplace of the Mondragon Corporation, the world's largest worker cooperative, whose foundation was inspired in the 1940s by the Catholic priest José María Arizmendiarrieta.

Noted poverty expert and sociology professor Barbara J. Peters of Stony Brook Southampton has studied the incorporated and entirely resident-owned town of Mondragón.

"[2] The spa at Santa Águeda (now a psychiatric hospital) was the location of the 1897 murder of Spanish monarchist politician Antonio Cánovas del Castillo by Michele Angiolillo.

After the establishment of democracy, the first mayor elected in Mondragón was the nationalist José Antonio Ardanza, who served from 1979 to 1983 and later became lehendakari of the Basque government from 1985 to 1999.

Pierre Boutron's French language film Fiesta!, adapted from a novel written by José Luis de Vilallonga, was set in Mondragón during the Spanish Civil War.